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ryanlkeith
New Member

My partner and I have a child in daycare. I pay most of the bills thus head of household but she has a Section 125 account that takes money out pre tax for child care.

How does she report where her money went if she can't claim the child care because I am head of household?
5 Replies
xmasbaby0
Level 15

My partner and I have a child in daycare. I pay most of the bills thus head of household but she has a Section 125 account that takes money out pre tax for child care.

Only the "custodial parent" can claim the childcare credit.  If you are an unmarried couple of parents who live together only one of you can claim the child.  You cannot split up the child-related credits.  Only divorced parents or parents who do not live together can split up the child related credits -- and even that has to follow the rules of a Form 8332.

 

Is this also your biological child?  You can only file Head of Household if this is your own child.  

 

Am I Head of Household?

https://ttlc.intuit.com/questions/1894553-do-i-qualify-for-head-of-household

https://ttlc.intuit.com/questions/2900097-what-is-a-qualifying-person-for-head-of-household

 

If you qualify as Head of Household, when you enter your filing status (single or married filing separately) into MyInfo, and then enter your qualifying dependent, TurboTax will offer HOH as your filing status.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
ryanlkeith
New Member

My partner and I have a child in daycare. I pay most of the bills thus head of household but she has a Section 125 account that takes money out pre tax for child care.

Yes I qualify for head of household. I guess how does my partner account on her taxes for her section 125 account if I’m claiming head of household but she has been taking money out pre tax for day care?

xmasbaby0
Level 15

My partner and I have a child in daycare. I pay most of the bills thus head of household but she has a Section 125 account that takes money out pre tax for child care.

She can't.  If she cannot claim the childcare credit, that pre-tax money becomes taxable income.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
AmeliesUncle
Level 11

My partner and I have a child in daycare. I pay most of the bills thus head of household but she has a Section 125 account that takes money out pre tax for child care.


@ryanlkeith wrote:

Yes I qualify for head of household. I guess how does my partner account on her taxes for her section 125 account if I’m claiming head of household but she has been taking money out pre tax for day care?


Box 10 of her W-2 should show the amount she contributed.  Then just follow all of the questions in TurboTax.  Because she does not qualify to contribute to the §125 account (because she is not claiming the child as a dependent), that amount will be added back as income on her tax return.

Opus 17
Level 15

My partner and I have a child in daycare. I pay most of the bills thus head of household but she has a Section 125 account that takes money out pre tax for child care.

With 2 unmarried parents living together and sharing custody, you can't use the "special rules for children of divorced or separated parents."

 

That means that one person claims the child as a dependent, and the other parent should simply delete the child from their return completely.  Don't even list their name.

 

The problem is that in the child's interview, you are asked "do you have an agreement to share custody."  This only applies to a court custody order for divorced or separated parents, not a verbal agreement between unmarried partners.  If parent A is going to claim the child, parent A must answer "no" to the agreement question in order to qualify for head of household and the dependent care credit.  Parent B should not list the child at all, because if parent B answers "yes", they may claim the wrong benefits, and if they answer "no" they will conflict with parent A.

 

In your case, parent A has a dependent care FSA account but parent B is claiming the child as a dependent.  Parent A will answer the questions about the FSA account, no I do not have qualifying expenses.  The FSA amount is added back to the person's taxable income, but there is no additional penalty.  Parent B may use the child's expenses to qualify for the child and dependent care credit, since the expenses were paid with taxable money.

 

Incidentally, to withdraw any money from the FSA, parent A must certify these are qualifying expenses.  Since they are not, parent A can't get any money out unless parent A lies on the reimbursement form.  Since the compliance burden for FSAs is on the employer, not the employee (or the employer's hired benefit administrator), the taxpayer won't get in trouble if the employer is audited, but the employer could get in trouble, and this could really mess up your relationship.  If you can't cancel the FSA, it may be better for parent A to claim the child and use the FSA even though parent B loses the benefit of HOH status.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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